NewsLocal NewsCleveland Metro


Economy likely headed towards recession, but it's not like 2008

Posted at 5:27 PM, Mar 13, 2020
and last updated 2020-03-13 19:43:25-04

CLEVELAND — On Friday morning U.S. Treasury Secretary Steve Mnuchin looked to calm fears on CNBC and stress what we are dealing with in the financial markets is not like what we saw in 2008.

"This isn't like the financial crisis," he said. "We have a medical situation that has shut down and will shut down parts of the economy like we've never seen, but then they're going to open back up."

That doesn't mean the economy isn't moving towards a recession said Scott Shane, Professor of Economics at Case Western's Weatherhead School of Management. "We're probably in a recession now," he said. "If we're not in a recession now we will be because you can't curtail all of this economic activity and not be in a recession."

Even for economists the massive pendulum swing in the market the past two weeks has been eye opening.

"We see financial markets where people are going crazy and selling and no one wants to buy and the next day people are buying like crazy," Shane said. "And markets are going up and down in like 10% intervals, it's crazy."

Shane also believes that what the economy is going through is different from what we saw in 2008 because their is liquidity in the market but he believes the actions of Washington need to put Wall Street and Main Street at ease right now, not add to the uncertainty.

"I think the most important thing is people are panicking in multiple sectors and the one thing you have to do is change the psychology of this or it becomes a self fulfilling prophecy," Shane said.

That's why he hopes to see in bipartisanship in whatever Washington comes up with to ease the situation.

"If the Democrats want a few things put in a solution and the Republicans want a few things in a solution let's just over solve the problem, put in a little too much from both sides and just get some action done," Shane said.